Weekly Thoughts

Weekly Thoughts 26 June 2020

I have a few investment thoughts to share following listening to the clever people from Ninety One and FIM Capital (Isle of Man investment guys) during the week.

There seems to be some positivity held for global growth in 2021. For good, dividend-paying global companies, both in 2021 and going into 2022. FIM mentioned companies like Coca-Cola. It will always survive and be strong. The world has not stopped and will continue to drink their products. Then Unilever – they said we’ll all be brushing our teeth and feel a need to wash our hair when social distancing is over. Visa: Online buying has been up 30% around the world in the past few months. Visa will carry so many of those transactions.

From the point of good international properties being held by FIM, they pointed out that the distribution warehouses they own are well-positioned for the online buying segment. Products all land in a distribution warehouse before being couriered out to buyers, making these warehouses even busier. Solid income to the tenant. Solid rent to the landlord.

Weekly Thoughts 29 May 2020

In the last couple of weeks, via live internet presentations and discussions, I have listened to Ninety One (Investec) twice, Allan Gray, Bridge Fund Managers, Sarasin from London and had personal one-on-one’s with my Coronation consultant and one of the fund managers from Marriott.

I think I have mentioned before, that Bridge Fund Managers are the first group that have come along doing the same thing that Marriott does: investing with the same approach and offering an income-focused outcome. I have been listening and watching and also been visited by them. However, just because there’s a new kid on the block doesn’t mean one goes to play at their house. If they have no new or different toys for me to play with, there is no reason for me to use them. But it’s my job to watch and see, and if and when they offer anything better, then I should be ready to use.

My one-on-one with the Marriott Fund Manager was to discuss and thrash out different fund mixes I have been researching and testing to optimize income. Mixing and matching four of their funds in the different products I can use them in, in order to get the best, or most appropriate, outcome to use for you.

Monday we ‘progress’ to a new number. And queues at every bottle store around the country. Tito will be happy with the increased revenue.

Weekly Thoughts 08 May 2020

One of my live asset manager presentations I dialled into this week, was to listen to a Director from Ninety One (ex-Investec). This particular guy is always entertaining and informative, always talking from a global economic and political point of view. An indication of his popularity is that there were somewhere around 3000 of us dialled in from around the country.

I thought to list a few points he made. These were all in context when he was talking at the time.

From his global round the world tour:

  • Consumers will drive growth
  • Spending will be cautious, savings will increase
  • Companies will hire less, become more efficient
  • Recovery in the 2nd half of 2020, going through 2021
  • This is not a global financial crisis, like in 2008. That was a banking collapse. This is a consumer problem.

His South African comments:

  • SA has some significant economic policy mandates in place
  • Opposition to supporting failing SOE’s is now gone
  • We’re in good hands
  • Business and govt are working well together
  • The sentiment is that the lockdown will cause more deaths than the virus will
  • Consumers will be more selective in future
  • Fast food will trigger up quickly
  • Pleasure industry will kick up quickly – hair, nails, spas
  • Many good companies have very strong balance sheets and will last through a crisis
  • Markets are telling us that we will be fine

Weekly Thoughts 24 April 2020

So today week we get to transfer from the maximum security holding to the medium-security facility. At least it’s a move. I think we’ll be able to go to the shops without having to prove that we’re going to shop. On Tuesday this week, I did said weekly shopping run, to shop for office supplies. Office food that is. I also filled my car with petrol, all 13 litres of it. That was for the past three and a half weeks of travel. I guess this time that we find ourselves in will bring with it a lot of forced savings for most of us. No sitting and working in that coffee shop. No restaurant or pub visits. No spending money on going to your mate’s house for a braai, or on that pointless shopping excursions to the Mall. Or on that five-day motorbike trip through Lesotho I was supposed to be doing with friends next week.

I continue to dial in too many live internet conversations and presentations. They’re all doing it. Investec, now called Ninety One – for those of you looking for snippets of uninteresting information to get you through these days – has held two per week. Their one yesterday was not investment orientated at all. They had a speaker who dealt with motivation for us Financial Advisors. You know, the usual motivational stuff: keep our heads up, create positivity in our minds and in our days and therefore in our business and our clients. There is probably a lot of this currently needed as a theme for corporate conversations. The asset managers are all either talking about the obvious economic issues around the world, or how they feel their own funds will hold up in the end. I suppose what else can they say.

Weekly Thoughts 3 April 2020

We’re 8 days in. I’m washing dishes and sweeping the house more than I used to. The Murray House is doing puzzles, reading, finding a movie to watch most nights, playing cards, doing normal family stuff like being in each’s space for too long…. My son is doing his rugby coach’s gym program and uploading it onto the website for Coach to check on – through seeing heart rate effort. When you and I went to school it would have been; ‘Sir, I promise you, I did it’.

I’ve been allowing myself an extra hour’s sleep in the morning, after discovering that there seems to be more time in life what with no planning of travel required in the day. So the clock has been set for 6 am instead of the usual 5 am. However, I haven’t always been getting to six, what with the local resident herd of Hadidas and gang of Vervet Monkeys not having seen the recent memo that the world is in lock-down. The noise in the trees and on the roof providing a valid reason for going to work at the usual 5.30 am. At this time not only do I miss these creatures, but I usually gain the lovely sound of our resident owls saying goodnight. Or do owls say good-day when they go to bed?

What do I say about the picture of the world? So many constantly changing conversations. I am bombarded daily – four today alone – with various communications. Already this week I have listened, in various ways: videos and this new Zoom-Zoom internet communication thing, to three different fund manager talks around market and/or economic COVID-19 consequences. On Monday I have another, where quite a varied group of people have been put together for us to patch into. Us being a restriction on the first 100 to put our hands up and register.

The guys at Orbis, an offshore investment company I use for some of you, made the comment that they don’t have enough money to invest in the opportunities they see in the cheap markets right now. Implying they need investors to give them more money to put into the markets because many companies are very cheap right now. Too many sellers, not enough buyers.

On Tuesday the Marriott guys showed us how good many bond yields have become to invest in, due to governments around the world looking to raise funds. Periodically, while talking live to a group of us, he would get distracted by watching the bond traders, via another screen while sitting in his lounge, for the price he wanted to buy at, with a few hundred million Rand waiting to be used.

While there are many very, very serious consequences to many clients and many people – I learn of these daily – which are going to be here for months or years to come, markets are providing opportunities. However, we have not yet seen what will happen if the world locks down for three or four or five or six months. That will be another picture. I personally don’t think that can be done. We will have to continue and let the consequences be the consequences. Life or death or economic.

Interestingly, insurance companies have also come out with plans to help clients from either a premium paying point of view or an underwriting point of view. But this is as recent as the last two days.

There are changes daily, from what the various financial services companies, Banks included, are putting out there. A bank doesn’t want to own your property or business. It would rather help you hang in there so that you can run it for them again one day. There is already much being said about what the world will be like after all this, what we’ll have learnt. But what’s the point of looking at that when the problem is not over. When survival is not over. When people are still struggling. There is no point and it’s not fair.

Weekly Thoughts 24 April 2020

Maybe this newsletter needs to be about my office’s sustainability over the next three weeks or so and those of the businesses I use for you too.

My office will be able to continue with largely uninterrupted service for you. For those of you who live far away and have never physically visited us, we are situated in what is, in effect, a small townhouse type residential place that I rent from a nearby neighbour. I literally walk three doors down the road to work.

Adrienne has already been working remotely from home for some time now, so she is in a good space. Jacki will be taking a computer home today to set herself up for working from home too. I will continue to walk my three doors down the road and go into the office every day, seeing as I will be alone anyway and I reckon that the chances of the army catching me out in the streets in our quiet cul-de-sac are, I’m sure, about nil. But I can also work from home if need be.

So you can continue to email any of us and our service to you will continue without much disruption at all. We will continue with investment processes, administration changes, enquiries and I can continue with any Financial Planning analyses and reporting back to you.

All the companies that I use for you, whether it be insurance companies or asset managers, have sent us detailed plans of how their service delivery will continue uninterrupted, with all companies having set up the majority of their staff to work from home over the forthcoming 21 days.

The world is now in a space I bet none of us thought we’d see in our lifetimes. History will record this in its own way. Times will be difficult for many and most of us.

Weekly Thoughts 16 March 2020

On Friday morning I had a 7 am breakfast in Hillcrest with an Investment Manager from Marriott. We met in a trendy, non-franchise coffee shop situated in a warehouse-type building. I had wanted time with him to go over the results of fund and income research and testing I had been playing with across Marriott’s funds for the benefit of my clients. Naturally, the conversation went to viruses and economics and the global issues we are and will continue to face.

He went over the fact that Marriott, both locally and offshore through their international unit trust funds and FIM Capital share portfolios, don’t own travel, holiday, airline or resource companies, these being some of the sectors that are obviously being hardest hit right now and will continue to be so. He pointed out that the only stores folk in Wuhan province in China are allowed to go to, are grocery stores and the chemist. So consumer companies will still make an income even if their share price drops. And their income won’t drop as far as their share price might. Just imagine the increased income for mobile phone and data companies during these times of lock-down!

This took him to say that now is a buying time for people who can invest, not a time to sell. Markets will recover he said, the world will continue.

Weekly Thoughts 6 March 2020

The current talking point at the top of the list of all things is obviously the Coronavirus situation. Some Comments on the topic from a few asset managers I use for you:

• Companies like Nestle will be resilient. Consumers cannot go without its products.
• The recent market drops have created some good buying opportunities.
• We moved quickly to sell our equities in travel, selected banks, emerging markets and some China-focused technology.
• The sorts of investments that will suffer long-term scars are not what we hold for our clients.
• … a market shake-up gives us the opportunity to be on the lookout for new, attractively priced investments. We are actively looking to use the cash holdings in our Global Funds for this.
• Even with the lower profits and earnings that will be experienced, we urge long-term investors to hold and overcome the short term negative sentiment.

It seems that I now live in the area of the first confirmed case in South African. I shall have to become a hermit.

Weekly Thoughts 17 January 2020

This past week we delivered one times Murray subject and all his paraphernalia to Michealhouse to begin his last year. I remember delivering him four years ago to begin his first year. But then it was into a room of 5 other boys where their ‘turf’ existed of a bed with a cupboard next to it. Now it was to his own room, the room of Head of House, big enough to house his bed, a couch, a bean bag, a fridge, a desk, a cupboard…… and his own view across the central quad. He is privileged in having a small, complete bathroom across the passage to share with only one other senior boy, the Head Boy. He is now allowed to walk across the grass in the Quad and he can have as many ‘sleep-outs’ as he wants. These become serious steps up the ladder in a boarding school. We have but 10 or 11 short months of continuing with a child in school. And then he’ll go seek his fortune. He’ll go to some university to study how to become a true capitalist and taxpayer. I would trade places with him for this last year of his school life in a heartbeat. I wouldn’t think twice.

This week I met with clients at two different ends of this picture; one about to retire and one just entering the workplace after graduating. These things happen so fast. What did I say to the one entering the workplace? You must save from month one because time is all you have. And then it’s gone.

I also met with a couple of us average folk in the middle of this road, the road from the start to the end. One client and I met in the Oldest Pub and Restaurant in Johannesburg, in the dubious neighbourhood along Louis Botha Drive. He and I go back to nearly party-line telephone years.

What amazes me through all this, is how unless we do basic planning, time has but gone. Three years and one month ago, I started an R300 per month investment in my son’s name. The fund will provide dividend income for him in his retirement years – this is what it’s designed for. There is already R12 400 in the fund, producing a quarterly income. In 45 years time, this will pay useable dividends. I have implemented this idea with quite a few of you. I will bring it to more of you.

Weekly Thoughts 19 July 2019

Interest rates went down yesterday by 0.25%. For those of us paying off HP debt such as a house or car, it is a good idea to continue paying the same amount you have been paying. You might need to check what the payment difference is after the first month of change and then create the routine of paying the difference yourself each month, or see if your bank can keep the same debit order going for you. You will now be paying the capital off a bit faster than before. A good thing.